The US Secretary of State has strongly condemned the terrorist bombing of a bus at lunchtime in central Tel Aviv.

Hillary Clinton, who is to meet Egyptian President Mohammed Morsi later today as efforts to forge a ceasefire deal between Israel and Hamas continue, spoke only hours after the blast on Shaul Hamelech Street, not far from the Tel Aviv Museum. The bus was on the 142 route, and was travelling down a street with pedestrians on the pavement.

At least three people sustained serious injuries, while up to 21 more suffered minor to light injuries. According to reports, the bomb was a small device, believed to have been placed on board by a male terrorist. Police have not confirmed whether the suspect is in custody.

An emergency worker from Magen David Adom, which had ambulances on the scene just three minutes after the bomb went off, said people were feeling concerned and afraid in the wake of the attack. Yonatan Yagodovsky, who said that a 20 year old woman had lost an arm in the explosion, said there were people of all ages on board at the time. "Like you would have in any normal country where people travel on public transport," he said. He said that the bus itself was badly damaged, with the windows exploded and glass sent all around.

"All MDA units around Israel are on high alert right now because of the missiles," he said. "We didn't know the full volume of damage on the scene - there could be shrapnel injuries or peopel could ahve internal injuries."

The driver told Reuters: "Smoke was everywhere, you couldn't see a thing."

The last time a bomb exploded in Tel Aviv, Israel's commercial centre, was during Passover nearly six years ago, when 11 people were killed during a blast at a café near the old Central Bus Station.

That attack was a suicide bomb, but today's explosion was caused by a device left on the bus by the terrorist.

As news of the blast filtered through to Gaza, there were reports of celebratory gunfire on the streets. A Hamas spokesman praised what had happened, although it is unclear if the organisation is claiming responsibility.

"Hamas blesses the attack in Tel Aviv and sees it as a natural response to the Israeli massacres...in Gaza," Sami Abu Zuhri told Reuters.

UN Secretary General Ban Ki-Moon expressed shock at the attack and said he condemned it in the strongest possible terms. "There are no circumstances that justify the targeting of civilians," a statement from him read. "The Secretary General is saddened and expresses his sympathy to those injured in the blast."